Winston Churchill once called Russia “a riddle wrapped in a mystery inside an enigma" – a description that could easily be applied to elite Chinese politics.

The decision-making process and political machinations of the upper echelon of China’s Communist Party are a proverbial “black box", a system marked by an opaqueness that complicates investor efforts to divine the full impact of China’s ascent and growing importance as an increasingly integrated member of the global economy and markets.

That lack of transparency has been brought sharply into focus over recent days with the conspicuous absence of Xi Jinping, the man slated to assume the presidency from incumbent
Hu Jintao
in a leadership transition starting next month.

The speculation whipped up by Beijing’s cack-handed handling of Xi’s absence compounds uncertainty for investors worried by the deceleration in the world’s second largest economy to its slowest pace in three years.

China’s leadership and economy are at an inflection point. But investors are in the dark as to the whereabouts of the country’s next head of state ahead of the first phase of a leadership transition starting at a party congress to be held at some undefined time next month.

Investors like certainty, but they are instead getting uncertainty layered upon uncertainty.

But gaining a clear insight into politics or the state of the economy is a challenge for investors trying to allocate capital in the Australian sharemarket, a market influenced by China’s economic policy choices and leaders making them.

Those truly knowledgable about what is happening in China can be narrowed to the nine members of the Politburo standing committee, the apex of political power.

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Most investors trying to grasp the changing dynamics unleashed on the global economy and markets by China’s rise depend on news reports and investment research to shape their opinions. But both sources of information have their limits in delivering a true picture about what is happening inside Australia’s trading partner.

The Chinese media is muzzled by the state’s tight control over what is reported.

Western media take a harder approach to the many challenges of Chinese politics, society and politics but they have minimal access to key decision makers.

Western media depend on indirect sources to gain insight, such as academics or think tanks connected to state ministries.

Economic research from leading banks also has its weaknesses.

The quality of China’s economic data is suspect, a point hammered home by Li Keqiang, the man slated to replace in
Wen Jiabao
as China’s premier.

In 2007, he referred to China’s economic data as “man-made" and “for reference only".

If one of the most powerful men in China can’t depend on the data to gauge the state of the economy, what hope have Western investors?

Xi’s absence has stoked debate about China’s future leadership team.

Stability is a keyword in China.

Xi’s absence is unfortunate for the Communist Party as it has struggled to present an image of a seamless transition and unified party after the purging of Bo Xilai.

But the reality is that Chinese politics and policy are not dictated by one person, like they were in the days of Mao and Deng Xiaoping.

Chinese politics has become more consensual, an evolution partly to blame for the lost reform momentum in the Hu-Wen era.

But amid the background of the political jockeying ahead of the leadership transition, there is one source of some certainty for investors – the 12th Five Year Plan.

While the faces in the standing committee may change, the broad brush strokes of China’s development game-plan between 2011 and 2015 likely won’t change substantially.

But investors focused on the short term will be hoping Xi’s absence doesn’t lead to a revival of leadership tensions at a time when global markets are looking to China for economic stability.